EXHIBIT 4.3
INCENTIVE STOCK OPTION AGREEMENT
THIS INCENTIVE STOCK OPTION AGREEMENT (the "Agreement") is made and
entered into, effective on the "Effective Date" set forth on the signature page
hereof (the "Effective Date"), by and between MACHINETALKER, INC., a Delaware
corporation ("Company"), and the person executing this Agreement as the "Holder"
hereunder ("Holder"), pursuant to the STOCK OPTION PLAN (the "Plan") sponsored
by the Company.
FOR VALUABLE CONSIDERATION, receipt which is hereby acknowledged,
Company hereby grants to Holder the following option (the "Option"):
SECTION 1. GRANT OF OPTION. Subject to the terms and conditions hereinafter
set forth, Company hereby grants to Holder the right and option to purchase from
the Company the number of shares of the Company's common stock ("Common Stock")
designated on the signature page hereof as "Option Shares" (the "Option
Shares"), at the exercise price per share set forth on the signature page
hereof, and subject to such vesting schedule as are set forth in Section 2,
below. Except as otherwise specified herein, this Option is exercisable at any
time and from time to time during its term, in whole or in part. Unless earlier
terminated pursuant to Section 7 or 9 hereof, this Option will terminate in all
respects, and all rights and options to purchase shares hereunder will
terminate, ten (10) years from the Effective Date of this Option.
SECTION 2. VESTING AND EXERCISE OF OPTION. This Option shall be exercisable
from time to time only to the extent that Holder then has become vested in this
Option. As of any date during the term of this Option, Holder shall be entitled
to purchase such number of the Option Shares (to the extent not previously
purchased hereunder) as is determined by multiplying the total number of Option
Shares times Holder's then-current vesting percentage as determined under
Sections 2(a), below.
(a) Subject to acceleration pursuant to Section 7, below, Holder shall
become vested in this Option over the four-year period commencing on the
"Vesting Commencement Date" set forth on the signature page hereof (the
"Vesting Commencement Date") as follows: (i) Holder shall become vested in
twenty-five percent (25%) of this Option following Holder's completing one
year of continuous service as an employee of the Company from and after the
Vesting Commencement Date, and (ii) thereafter, Holder shall become vested
in one-thirty-sixth (1/36th) of the remainder of this Option for each
complete period of thirty (30) consecutive days that Holder subsequently
remains continuously employed with the Company from and after the first
annual anniversary of the Vesting Commencement Date.
(b) Holder may exercise this Option at any time during the term hereof
with respect to Option Shares in which Holder has become vested by
delivering to the Company (i) a written notice of exercise, specifying the
number of Option Shares that Holder has elected to purchase hereunder and
the address to which the certificate representing such shares is to be
mailed, (ii) cash, certified or bank check or postal money order payable to
the order of the Company for an amount equal to the sum of (x) the Exercise
Price of such shares, plus (y) the amount, if any, required to fund
withholding taxes due with respect to such exercise, as contemplated by
Section 11, below, and (iii) such documentation as is necessary to satisfy
the conditions precedent to exercise set forth in Section 3, below.
(c) If Holder's employment with the Company is terminated for any
reason prior to Holder's becoming one hundred percent (100%) vested in this
Option, then Holder's rights with respect to the unvested portion of this
Option shall expire forthwith on the effective date as of which Holder's
employment is terminated.
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SECTION 3. CONDITIONS PRECEDENT. As a condition precedent to any exercise
of this Option, upon request of the Company, Holder (or if any other individual
or individuals are exercising this Option, such individual or individuals) shall
deliver to the Company pursuant to Section 2(a)(iii), above, each of the
following:
(a) An investment letter in form and substance satisfactory to the
Company and its counsel, containing among other things (including an
acknowledgment of the rights of first refusal set forth in Section 11,
hereof) a statement by Holder that (i) the Option is then being exercised
for the account of Holder and only with a view to investment in, and not
for, in connection with or with a view to the disposition of, the shares
with respect to which the Option is then being exercised; (ii) Holder has
been advised that Rule 144 of the Securities and Exchange Commission (the
"Commission"), which permits the resale, subject to various terms and
conditions, of small amounts of "restricted securities" (as therein
defined) after they have been held for one (1) year, does not now apply to
the Company because the Company is not now required to file, and does not
file, current reports under the Securities Exchange Act of 1934 (the
"Exchange Act"), nor is there publicly available information concerning the
Company substantially equivalent to that which would be available if the
Company were required to file such reports; (iii) Holder understands that
there is no assurance that the Company will ever become a reporting company
under the Exchange Act and that the Company has no obligation to Holder to
do so; (iv) Holder and Holder's representatives have fully investigated the
Company and the business and financial conditions concerning it and have
knowledge of the Company's then current corporate activities and financial
condition; and (v) Holder believes that the nature and amount of the shares
being purchased are consistent with Holder's investment objectives,
abilities and resources. The restrictions imposed by the foregoing
investment representations will be inoperative upon the registration with
the Commission of the stock subject to this Option or acquired through the
exercise of this Option.
(b) An executed Stock Transfer Agreement (the "Stock Transfer
Agreement") in form reasonably satisfactory to the Company in which, inter
alia, Holder shall grant to the Company a right of first refusal prior to
any sale or attempted sale of any Option Shares to any other person. Such
first-refusal rights shall not apply to any Transaction (as defined in
Section 7, below), and in all events shall terminate and be of no further
force or effect from and after the first date as of which the Company has
filed with the United States Securities and Exchange Commission (the
"Commission") a registration statement for the sale of any shares of Common
Stock under the Securities Act of 1933, as amended (the "Securities Act"),
and such registration statement becomes effective. If there is any conflict
or inconsistency between the provisions of this Option and the provisions
of any Stock Transfer Agreement, then the provisions of the Stock Transfer
Agreement shall control.
SECTION 4. MARKET STAND-OFF. In addition to any restrictions stated in the
Stock Transfer Agreement, the Holder also agrees for a period of up to one
hundred eighty (180) days from the effective date of any registration of
securities of the Company under the Securities Act of 1933, as amended (the
"Securities Act"), upon request of the Company or the underwriters managing any
underwritten offering of the Company's securities, not to sell, make any short
sale of, loan, grant any option for the purchase of, or otherwise dispose of any
shares issued pursuant to the exercise of this Option, without the prior written
consent of the Company and such underwriters.
SECTION 5. DELIVERY OF SHARES. Within a reasonable time following the
receipt by the Company of the written notice and payment of the option price for
the shares to be purchased thereunder and the fulfillment by Holder of the
conditions precedent to exercise of this Option, the Company will deliver or
cause to be delivered to the Holder (or if any other individual or individuals
are exercising this Option, to such individual or individuals) at the address
specified pursuant to Section 2 hereof a certificate or certificates for the
number of shares with respect to which the Option is then being exercised,
registered in the name of the Holder (or the name or names of the individual or
individuals exercising the Option, either alone or jointly with another person
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or persons with rights of survivorship, as the individual or individuals
exercising the Option will prescribe in writing to the Company); provided,
however, that:
(a) Such delivery will be deemed effected for all purposes when a
stock transfer agent will have deposited such certificate or certificates
in the United States mail, addressed to the Holder (or such individual or
individuals) at the address so specified; and provided further that if any
law, regulation or order of the Commission or other body having
jurisdiction in the premises will require the Company or the Holder (or the
individual or individuals exercising this Option) to take any action in
connection with the sale of the shares then being purchased, then, subject
to the other provisions of this paragraph, the date on which such sale will
be deemed to have occurred and the date for the delivery of the
certificates for such shares will be extended for the period necessary to
take and complete such action, it being understood that the Company will
have no obligation to take and complete any such action.
(b) Notwithstanding the foregoing, if this Option is exercised for
shares subject to the first-refusal rights described in the Stock Transfer
Agreement, then the certificate or certificates representing such shares
will be delivered in accordance with the terms of, and as described in the
Stock Transfer Agreement.
SECTION 6. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. The existence of
this Option will not affect in any way the right or power of the Company or its
stockholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issue of bonds,
debentures, preferred or prior preference stock ahead of or affecting the Common
Stock or the rights thereof, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.
If the Company will effect a subdivision or consolidation of shares or other
capital readjustment, the payment of a stock dividend, or other increase or
reduction of the number of shares of the Common Stock outstanding, without
receiving compensation therefor in money, services or property, then the number,
class, and per share price of shares of stock subject to this Option will be
appropriately adjusted in such a manner as to entitle the Holder to receive upon
exercise of this Option, for the same aggregate cash consideration, the same
total number and class of shares that the owner of an equal number of
outstanding shares of Common Stock would own as a result of the event requiring
the adjustment. Except as hereinbefore expressly provided, the issue by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, for cash or property, or for labor or services, either
upon direct sale or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares of obligations of the Company convertible
into such shares or other securities, will not affect, and no adjustment by
reason thereof will be made with respect to, the number or price of shares of
Common Stock then subject to this Option.
SECTION 7. EFFECT OF CERTAIN TRANSACTIONS. If the Company is a party to a
merger or reorganization with one or more other corporations, whether or not the
Company is the surviving or resulting corporation, or if the Company
consolidates with or into one or more other corporations, or if the Company is
liquidated, or if there is a sale or other disposition of substantially all of
the Company's capital stock or assets to a third party or parties (each
hereinafter referred to as a "Transaction"), in any case while this Option
remains outstanding: (a) subject to the provisions of clause (b) below, after
the effective date of such Transaction this Option will remain outstanding and
will be exercisable in shares of Common Stock or, if applicable, shares of such
stock or other securities, cash or property as the holders of shares of Common
Stock received pursuant to the terms of such Transaction; or (b) the time for
exercise of this Option may be accelerated by the Company's Board of Directors
so that this Option will be fully exercisable on or prior to the effective date
of such Transaction; provided that (x) notice of such acceleration will be given
to the Holder, and (y) the Holder will have the right to exercise this Option in
part or in full prior to the effective date of such Transaction.
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SECTION 8. RIGHTS OF HOLDER. No person will, by virtue of the granting of
this Option to the Holder, be deemed to be a holder of any shares purchasable
under this Option or to be entitled to the rights or privileges of a holder of
such shares unless and until this Option has been exercised with respect to such
shares and they have been issued pursuant to that exercise of this Option. The
granting of this Option will not impose upon the Company any obligations to
employ or to continue to employ the Holder or, if applicable, to continue the
Holder as a director of the Company; and the right of the Company to terminate
the employment of the Holder will not be diminished or affected by reason of the
fact that this Option has been granted to the Holder. Nothing herein contained
will impose any obligation upon the Holder to exercise this Option. Although
this Option is intended to qualify as an incentive stock option under the
Internal Revenue Code of 1986, the Company makes no representation as to the tax
treatment to the Holder upon receipt or exercise of this Option or sale or other
disposition of the shares covered by this Option.
SECTION 9. RESERVATION OF SHARES. At all times while any portion of this
Option is outstanding, the Company will: reserve and keep available, out of
shares of its authorized and unissued stock or reacquired shares, a sufficient
number of shares of its Common Stock to satisfy the requirements of this Option;
comply with the terms of this Option promptly upon exercise of the Option
rights; and pay all fees or expenses necessarily incurred by the Company in
connection with the issuance and delivery of shares pursuant to the exercise of
this Option.
SECTION 10. TRANSFER AND TERMINATION. This Option is not transferable by
the Holder otherwise than by will or the laws of descent and distribution. This
Option is exercisable, during the Holder's lifetime, only by him, and by him
only while he is an employee of the Company, except that in the event that such
employment terminates for any reason other than for Cause as defined below, and
other than by reason of death, the Holder will have the right to exercise this
Option within ninety (90) days after the date he ceases to be an employee of the
Company (but not later than the expiration date of this Option). As used in this
paragraph, "Cause" means (a) any material breach by the Holder of any agreement
to which the Holder and the Company are both parties, and such material breach
is not cured within seven (7) days of written notice thereof, (b) any act (other
than retirement) or omission to act by the Holder which may have a material and
adverse effect on the Company's business or on the Holder's ability to perform
duties or services for the Company, including, without limitation, the
commission of any crime (other than ordinary traffic violations), fraud and acts
of moral turpitude, or (c) any material misconduct or material neglect of duties
by the Holder in connection with the business or affairs of the Company or any
affiliate of the Company, other than an error in good faith exercise of business
judgment. An employment relationship between the Company and the Holder will be
deemed to exist, for purposes of this Option, during any period in which the
Holder is employed in any capacity by the Company or by a parent or any
subsidiary of the Company. In the event of the death of the Holder while he has
the right to exercise this Option, his or her executors, administrators, heirs
or legatees, as the case may be, will have the right to exercise this Option at
any time within one hundred eighty (180) days after his death (but not after the
termination date of this Option).
SECTION 11. TAX WITHHOLDING. To the extent that the exercise of the Option
gives rise to an obligation on the part of the Company to withhold income tax
from amounts otherwise to be paid to Holder, the Company shall do so on such
terms and in accordance with such procedures as may be required under applicable
law. If Holder's wages from the Company are insufficient to fund payment of
Employee's share of such withholding taxes, Holder shall deposit such monies
with the Company as a condition to exercising this Option.
SECTION 12. MISCELLANEOUS.
(A) NOTICES. All notices permitted or required by this Agreement shall
be in writing and shall be deemed to be delivered and received (i) when
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personally delivered, or (ii) on the day on which sent by facsimile,
electronic mail, or other similar device generating a receipt evidencing a
successful transmission, or (iii) on the third (3rd) business day after the
day on which deposited in the United States mail, first-class-certified
mail, return receipt requested, postage prepaid, transmitted or addressed
to the person for whom intended, at the facsimile number, email address, or
mailing address appearing at the end of this Agreement or such other
facsimile number, email address, or mailing address, notice of which is
given in the manner contemplated by this Section 12(a).
(B) LEGENDS. All share certificates evidencing Option Shares shall
bear such legends as the Company, in its discretion, determines to be
appropriate to reflect restrictions imposed upon such Shares by the Plan,
this Agreement, and applicable federal and state securities laws.
(C) NO EMPLOYMENT RIGHTS. Neither the adoption of the Plan, the
granting of the Option evidenced by this Agreement, or any other action
taken by the Company in connection therewith are intended or shall be
construed as giving to Holder any right to be retained in the employ of the
Company for any period of time or to restrict in any manner the right and
power of the Company to terminate Holder's employment with the Company.
(D) GOVERNING LAW. This Option shall be governed by the Internal
Revenue Code of 1986, as amended, and by the internal laws of the State of
California, without regard to conflict of law principles.
(E) GOVERNMENT REGULATIONS. The Option is subject to all laws,
regulations and orders of any governmental authority which may be
applicable thereto and, notwithstanding any of the provisions hereof, the
Holder agrees that he will not exercise the Option granted hereby nor will
the Company be obligated to issue any shares of stock hereunder if the
exercise thereof or the issuance of such shares, as the case may be, would
constitute a violation by the Holder or the Company of any such law,
regulation or order or any provision thereof. The Company will not be
obligated to take any affirmative action in order to cause the exercise of
this Option or the issuance of shares pursuant hereto to comply with any
such law, regulation, order or provision.
(F) OPTION SUBJECT TO PLAN. This Option is and will be subject in
every respect to the provisions of the Company's 2001 Stock Option Plan, as
amended from time to time, which is incorporated herein by reference and
made a part hereof. The Holder hereby accepts this Option subject to all
the terms and provisions of the Plan and agrees that (i) in the event of
any conflict between the terms hereof and those of the Plan, the latter
will prevail, and (ii) all decisions under and interpretations of the Plan
by the Committee or the Board will be final, binding and conclusive upon
the Holder and his or her heirs and legal representatives.
[Signatures appear on the following page.]
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IN WITNESS WHEREOF, the parties have executed this Option, or caused
this Agreement to be executed, as of the Effective Date.
"COMPANY": "HOLDER:"
MACHINETALKER, INC.,
a Delaware corporation
By_____________________________ ______________________________
Xxxxxx X. Xxxxx, President Holder's Signature
Address and Facsimile No. for Notices: ______________________________
Holder's Printed Name
MachineTalker, Inc.
000 Xx Xx Xxxx Xxxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000 Address and Facsimile No.
for Notices:
-------------------------------
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Facsimile No.: (000) 000-0000
Facsimile No.:( )_____________
No. of Option Shares:__________
Vesting Commencement Date:_____
Effective Date:_________________
Exercise Price Per Share:_______
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